18 Share Tips – 9th December 2024

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Dylan Evans, Catapult Wealth 

BUY RECOMMENDATIONS

BUY – Northern Star Resources (NST)

We are bullish about the outlook for gold. We expect gold prices to be supported by growing budget deficits across Europe, Japan, and the US. Northern Star is well placed to benefit from a rising gold price, with its plan on track to grow core production from 1.6 million ounces a year to 2 million ounces within the next two years. Northern Star’s recent update included disappointing sales numbers, in our view, due to work at two of its mines. But we believe this will be a short term setback, with momentum returning during the next 12 months. NST has agreed to acquire De Grey Mining and its flagship project Hemi, a large scale gold development project in the Pilbara region of Western Australia.

BUY – ResMed Inc (RMD)

ResMed posted a top first quarter result in fiscal year 2025. Income from operations was up 34 per cent on the prior corresponding period, which was well above previous guidance. Revenue was up 11 per cent. ResMed provides sleep apnoea solutions in a market with strong growth potential. Awareness and diagnosis of sleep apnoea continues to grow, but only a small percentage of potential patients are receiving treatment. Consequently, this represents a huge opportunity for ResMed. Fears that new weight loss and diabetes drugs would impact the business continue to ease, and, in our view, pose limited risk.

HOLD RECOMMENDATIONS

HOLD – CSL (CSL)

CSL reported fiscal year 2024 results in line with expectations. The core blood plasma business, which generates 68 per cent of revenue, was a major contributor, growing 18 per cent on the prior corresponding period. The immunisation and kidney disease divisions were soft, in our view, dragging on the overall result. A stagnant share price combined with underlying growth have improved CSL’s valuation. But the kidney and immunisation divisions will need to improve for the stock to find momentum and break out of its stagnant price trend.

HOLD – Woolworths Group (WOW)

The supermarket giant lifted group sales by 4.5 per cent in the first quarter of fiscal year 2025 when compared to the prior corresponding period. However, value conscious shoppers are buying discounted products, which led to a lower margin sales mix. Australian food earnings before interest and tax (EBIT) for the first half is now forecast to be below previous expectations. WOW expects EBIT to range between $1.480 billion and $1.530 billion compared to $1.595 billion in the first half of fiscal year 2024. The company is addressing the issues and taking steps to improve its financial performance.

SELL RECOMMENDATIONS

SELL – Bendigo and Adelaide Bank (BEN)

Lack of scale and higher costs leaves Bendigo struggling to compete with the major banks on interest rates, without sacrificing profit margin. As a result, regional banks, including Bendigo, can be less profitable over the longer term. Statutory net profit after tax rose 9.7 per cent in fiscal year 2024 when compared to the prior corresponding period, but cash earnings after tax were down 2.6 per cent. The net interest margin of 1.9 per cent was down 4 basis points and the cash return on equity was down 44 basis points. We believe the major banks offer potentially more upside than Bendigo moving forward.

SELL – WiseTech Global (WTC)

WiseTech develops and provides software solutions to the global logistics industry. The company lifted total revenue by 28 per cent in fiscal year 2024 when compared to the prior corresponding period. Statutory net profit after tax was up 24 per cent. The shares have risen from $99.37 on October 24 to trade at $133.68 on December 5. High expectations are built into the shares, which are trading on a lofty price/earnings ratio. Any miss in expectations may significantly impact the share price. Investors may want to consider cashing in some gains at these levels.

Jed Richards, Shaw and Partners

BUY RECOMMENDATIONS

BUY – Genesis Minerals (GMD) 

Genesis produces 300,000 ounces of gold a year and has a mineral resource of more than 15 million ounces in the ground. Since its inclusion in the S&P/ASX200 in July 2023, the company has found more investor support, and the share price is moving higher with the gold price. The company continues to find extensive opportunities to grow reserves. The shares are enjoying favourable momentum, increasing from $1.76 on July 1 to trade at $2.51 on December 5.

BUY – Pengana International Equities (PIA) 

Pengana is a diversified funds management group. Top holdings include global growth stocks Meta (Facebook), Microsoft, Amazon, Netflix and Alphabet (Google) among others. The fund delivered a total shareholder return of 21 per cent in the 12 months to October 31, 2024. The fund trades at a discount of more than 10 per cent to asset backing at December 5. We suggest buying for exposure to high quality global growth companies.

HOLD RECOMMENDATIONS

HOLD – Woolworths Group (WOW) 

The supermarket giant recently updated the market about supply chain industrial action in relation to enterprise agreements at three distribution centres in Victoria and one in New South Wales. The company announced Australian food sales had been negatively impacted by about $50 million up to December 2. The share price is at the bottom of its trading range and the fully franked dividend yield should exceed 3 per cent in fiscal year 2025. In our view, Woolworths is clearly the Australian supermarket leader, and sales should consistently grow for many years. We suggest holding the shares through this tougher period before a brighter outlook emerges moving forward.

HOLD – PolyNovo (PNV) 

The company provides skin regeneration solutions via its NovoSorb biodegradable polymer technology. NovoSorb is a world leading treatment for burns, and more hospitals across the globe are buying the product every month. The company provides products and access to training in more than 42 countries. The company is performing strongly in the US. Product sales were up 54.5 per cent in fiscal year 2024 when compared to the prior corresponding period. Moving forward, sales are expected to grow by more than 30 per cent per annum.

SELL RECOMMENDATIONS

SELL – Car Group (CAR) 

While the company is a clear leader in the automotive online sales market, the share price has exceeded our valuation. The shares have risen from $32.67 on August 8 to trade at $41.32 on December 5. We find it be difficult to see the upcoming 2025 half year earnings result justifying the current share price. In our view, investors should consider taking the opportunity to realise some profits.

SELL – Qantas Airways (QAN) 

Although the passenger airline industry has returned to pre-COVID-19 levels, the Qantas share price has recovered and significantly exceeded the share price in 2019. The shares have risen from $5.35 on January 2 to trade at $9 on December 5. In our view, market enthusiasm levels are excessive, and the share price trades at levels that will be difficult to sustain. The share price is now above most analyst targets. We suggest investors consider selling the stock and locking in some gains.

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Damien Nguyen, Morgans 

BUY RECOMMENDATIONS

BUY – Maas Group Holdings (MGH)

This diversified industrial group recently raised capital to make three strategic acquisitions in the construction materials business, which are immediately earnings per share accretive. MGH has a track record of beating expectations, and is one of the few construction materials companies still listed on the ASX in a sector that has significant industry tailwinds. We view the current share price as an attractive entry point for a company we believe offers a bright outlook.

BUY – CSL (CSL)

CSL is a global biotechnology company. It makes medicines to treat haemophilia and immune deficiencies. Also, it makes vaccines to prevent influenza. Investors sold down the stock after COVID-19 vaccine sceptic Robert F. Kennedy junior was nominated to lead the US Health Department. Investors perceived Kennedy’s nomination as enhancing uncertainty across the wider pharmaceutical industry. We believe the sell off presents an opportunity to take a position in a company with a strong performance track record. The shares have fallen from $303.03 on October 21 to trade at $281.61 on December 5.

HOLD RECOMMENDATIONS

HOLD – GQG Partners Inc. (GQG)

Investors started selling GQG shares in November in response to the company’s exposure to Adani Group companies, where several Adani executives are at the centre of bribery allegations in the US. But GQG remains well diversified. Funds under management amounted to $US159.4 billion at October 31, 2024. The company recently announced a share buy-back of up to $A100 million, which reinforces confidence. We back management to navigate through this period of uncertainty.

HOLD – Woolworths Group (WOW)

Due to margin pressure, WOW’s share price has been recently volatile. We view this supermarket giant as a core holding due to its strong position in groceries and essentials. WOW is investing heavily in its online shopping and loyalty programs to future proof the business. However, we would like to see momentum return after its supply chain industrial action is resolved.

SELL RECOMMENDATIONS

SELL – Pro Medicus (PME)

This health imaging company recently announced a significant contract win with Trinity Health, one of the largest not-for-profit health care systems in the US. The 10-year contract with Trinity is worth $A330 million. Investors responded to the news by sending the share price above $250 for the first time. The shares have risen from $96.30 on January 2 to trade at $264.17 on December 5. While we view PME as one of the best quality growth companies on the ASX, it’s trading at a multiple with a lot of future growth and contract wins already priced in. We think it’s prudent to trim exposures here and consider undervalued opportunities.

SELL – Commonwealth Bank of Australia (CBA)

While CBA remains a market leader, the earnings multiple it trades on is excessive compared to its three major competitors. We believe it’s prudent to capitalise on CBA’s high valuation and re-allocate funds to its peers for a superior dividend yield. CBA shares have risen from $124.89 on August 5 to trade at $158.04 on December 5.

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The above recommendations are general advice and don’t take into account any individual’s objectives, financial situation or needs. Investors are advised to seek their own professional advice before investing. Please note that TheBull.com.au simply publishes broker recommendations on this page. The publication of these recommendations does not in any way constitute a recommendation on the part of TheBull.com.au. You should seek professional advice before making any investment decisions.